Will urban delivery fees be the end of free shipping? - ShipRx
Blog / The End of Free Shipping?
2 minutes read

The End of Free Shipping?

Last week, we discussed UPS and FedEx’s new surcharges in 82 urban zip codes. Now, some are saying these surcharges, ranging from $3.95 to $5.85, might be the final straw for free shipping.

According to a survey by CapitalOne Shopping, a staggering 82% of consumers say free shipping is the most important factor when choosing an online retailer, and 88% value free shipping over fast shipping. Offering free shipping is essential if you want to increase the likelihood of closing a sale.

So, how can we cater to customers’ demand for free shipping without incurring significant costs? In this article, we will explore strategies to help you thrive, even in the face of the latest wave of unexpected surcharges.

Do you ship to addresses in select ZIP codes within Boston, Massachusetts; Bronx and Brooklyn, New York; Chicago, Illinois; and Los Angeles and San Francisco, California? Prepare to see delivery area surcharges ranging, on average, from $3.95 to $5.85 per package on your next bill. FedEx and UPS set the DAS by considering the shipping method (air vs. ground) and whether the package is destined for a commercial or residential address. In most cases, the carriers calculate DAS by delivery address but may extend to pick-ups in the case of returns.

Of course, the above rates can rise to $7.70 per package with delivery to addresses categorized as “remote” or “extended.”

Increase the threshold for free shipping

While consumers have grown accustomed to fast, free shipping, a strategic adjustment can help businesses remain profitable. More than 40% of consumers are willing to spend $30 or more to qualify for free shipping— increasing their spending just to avoid paying for postage. Take advantage of an opportunity to increase average order value while maintaining free shipping— a win-win for everyone.

Apply conditions for free shipping

Instead of offering free shipping to all customers, consider limiting it to those who are part of your loyalty program or on your email list. This approach not only helps you maintain free shipping but also strengthens your relationship with these customers, potentially leading to repeat purchases. By focusing on your loyal customers, you can reassure them of your commitment to their satisfaction, fostering a sense of trust and loyalty.

Consolidate shipments

If your current strategy champions fast shipping by sending individual parcels as they’re ready, consider cost savings through consolidation. Since customers report valuing free over fast, give them the option at checkout to pay for faster delivery in separate boxes or receive free shipping on a potentially slower consolidated delivery.

Stop offering free returns

In 2022, the cost of US retail returns hit $817 billion, representing 16.5% of all online sales. According to returns management company Optoro, each return can cost the seller up to 39% of the item’s original cost.

While 24% of shoppers say they’re more likely to purchase if return shipping is free, we may be moving toward a new normal. According to return management company Narvar, 40% of retailers charged for returns during the 2023 holiday season — up from 31% in 2022.

Renegotiate your parcel rates

It’s easy to reduce your shipping costs when you partner with ShipRx for a parcel rate negotiation— and you can pass those savings on to your customer with free shipping benefits.

Our team often lowers shipping rates by 20-30% for customers, combining benchmarking data and a detailed analysis of your shipping operations to ensure you’re paying the lowest possible rate.

Sign up for a free savings analysis today. If your rates are great, we’ll tell you. If not, we’ll help you negotiate.

Free shipping may end someday, but when you’re saving money with ShipRx, you can make those decisions on your terms.


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The End of Free Shipping?

Last week, we discussed UPS and FedEx’s new surcharges in 82 urban zip codes. Now, some are saying these surcharges, ranging from $3.95 to $5.85, might be the final straw for free shipping.
Todd Partner

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